Sweden's big banks set for proposed 'risk tax' profit hit

Credit: REUTERS/INTS KALNINS

Sweden's big four banks will bear the brunt of a proposed government "risk tax" which will raise an extra 5 billion Swedish crowns ($570 million) a year, analysts said on Friday as shares in some of its largest lenders slipped.

STOCKHOLM, Sept 18 (Reuters) - Sweden's big four banks will bear the brunt of a proposed government "risk tax" which will raise an extra 5 billion Swedish crowns ($570 million) a year, analysts said on Friday as shares in some of its largest lenders slipped.

The Swedish government, which announced the tax on Thursday and said it had support from the Center and Liberal opposition parties, wants to raise more money to help foot the bill in the event of another financial crisis.L8N2GE4UW

If it becomes law, the tax is expected to raise 5 billion crowns in 2022, which is just under 5% of the combined annual profit of Sweden's four major banks in a typical year.

"This is pretty important ... it won't fully be paid by the big four banks, but to a large extent it will," Robin Rane, an analyst at Kepler Cheuvreux, said.

Sweden's top four banks are Swedbank SWEDa.ST, SEB SEBa.ST, Handelsbanken SHBa.ST and Nordea NDAFI.HE, but the tax also applies to foreign banks active in the country, with Denmark's Danske DANSKE.CO likely to be included.

Swedbank and SEB shares were down by 2.2% and 2.6 respectively, at 1021 GMT. Rane said the drop was likely to be due to the tax news, although such a move was not unexpected as the government had been trying to gather support for some time.

"The purpose of the new tax is to strengthen public finances and create space to cover the costs that a crisis in the financial system risks entailing," the finance ministry said.

The Swedish Bankers Association, a joint-lobbying group of the country's top banks, declined to comment, saying it was still analysing the government's plan.

"If the proposal goes through, as it seems it will, then it's a fairly large negative impact for the banks," Andreas Hakansson, a senior analyst at Danske Equities, said.

($1 = 8.7735 Swedish crowns)

(Reporting by Colm Fulton and Johan Ahlander; Editing by Alexander Smith)

((Colm.Fulton@thomsonreuters.com;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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